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Administrative Law. Professor Wells TR 9:30-10:45 Syllabus: http://law.missouri.edu/wells/admin/. Consumer Financial Protection Bureau (CFPB). CFPB began operating on July 21, 2011: What is the CFPB? The most basic answer: It’s an administrative agency.
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Administrative Law Professor Wells TR 9:30-10:45 Syllabus: http://law.missouri.edu/wells/admin/
Consumer Financial Protection Bureau (CFPB) • CFPB began operating on July 21, 2011: • What is the CFPB? • The most basic answer: • It’s an administrative agency. • Defined as “any government entity that exercises government authority.” • APA § 551(1)(A)-(H): Each authority of US gov’t, whether or not it is within or subject to review by another agency, that is not Congress, the federal courts, a territorial gov’t or certain military entities
Where do agencies come from? • Textbook (p. 3) – agencies don’t spring from nowhere • They are created/empowered by Congress via legislation OR by executive officials via executive orders • The CFPB was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) in 2010 (Pub. Law 111-203) • http://www.consumerfinance.gov/wp-content/uploads/2011/12/org_chart_v5.png • http://www.consumerfinance.gov/
What are agencies’ goals? • It depends on what area they serve – agencies tend to be specific in their focus. • Dodd-Frank (12 USC 5511(b)) authorizes the CFPB to exercise its powers to ensure that in the area of consumer financial products and services: (1) consumers get timely and understandable information to make responsible decisions about financial transactions; (2) consumers are protected from unfair, deceptive, or abusive acts and practices and from discrimination; (3) Federal consumer financial law is enforced consistently in order to promote fair competition; and (4) markets for consumer financial products and services operate transparently and efficiently to facilitate access and innovation
Where do agencies get the power to implement their goals? Through legislation. • Dodd-Frank empowers the CFPB to: • Conduct rule-makings, supervision, and enforcement re federal consumer financial protection laws - 12 USC 5512-14 • Restrict unfair, deceptive, or abusive acts or practices • Take consumer complaints - 12 USC 5493(b)(3) • Promote financial education among various constituencies - 12 USC 5493(d)&(e) • Research consumer behavior - 12 USC 5493(b)(1) • Monitor financial markets for new risks to consumers - 12 USC 5512 • Enforce laws that outlaw discrimination and other unfair treatment in consumer finance – 12 USC 5493(c) • Report to Congress – 12 USC 5496
Why should the government regulate consumer financial transactions rather than leaving them unregulated? • Why do we want (as the CFPB’s website says) to “make markets for consumer financial products and services work for Americans”? • What can unregulated acts by private actors do to those markets? What does regulation do for those markets?
Why consolidate operations in CFPB when they other agencies essentially did many of these same things? • Regulatory capture - when a regulatory agency created to act in the public interest instead acts in favor of the special interests that dominate in the industry or sector it is charged with regulating. • Public interest theoristsbelieve that regulatory capture involves regulatory failure because public officials lose focus on their purpose and act in favor of a regulated group, which produces negative externalities. • Public choice theoristsbelieve that regulatory capture is an inevitable occurrence when groups/individuals with a high-stakes interest in the outcome of regulatory decisions focus their resources to gain the outcomes they prefer, while members of the public, who have only a tiny individual stake in the outcome, ignore the issue altogether. The high-stakes group "captures" influence with the regulatory agency, so that the preferred policy outcomes of the special interest are implemented.
Continuing Dilemma of Administrative Agencies • Agencies exist to protect the public good (e.g., correct market failures, protect public “goods” like the environment, etc.) but they are subject to “regulatory failure” too, especially through capture or failure of agency processes. • Administrative law is concerned w/ this dilemma, either directly or indirectly, in one form or another. • Thus, administrative law is primarily concerned with those legal principles that • Define agency structure • Define the powers of agencies • Specify the procedural formalities agencies use • Determine the processes of agency decisions • Outline the role of the various entities interacting with agencies including: • Congress, the executive branch, reviewing courts, and regulated entities/individuals
Sources of administrative law: • Constitutional Law • Separation of Powers - control of agency & sources of agency power • Procedural Due Process – what must agency do/process to follow • Administrative Procedure Act (APA) – passed in 1946 • Prescribes procedures and a framework for judicial review • Organic/Enabling Statutes • Statutes establishing agencies/defining mission – sometimes also prescribe procedures • Other Statutes • Generally applicable statutes imposing requirements on all agencies – e.g., FOIA, NEPA, etc. • Federal Common Law • Mostly created prior to the APA (occasional reference back) • Regulations • Rules passed by agency to enforce a statute – see Code of Federal Regulations (“C.F.R.”)
